In June 2020, the payment service provider Wirecard collapsed. More than 20 billion euros in assets were destroyed. How did this come about and who is responsible for the bankruptcy? A process in Munich should now clarify that.
Who is accused?
Three former Wirecard managers are accused: the former CEO Markus Braun and the former managing director of a Wirecard subsidiary in Dubai, Oliver Bellenhaus. In addition, the ex-chief accountant of the payment service provider is in the dock. It is already foreseeable that Braun and Bellenhaus will be the central opponents in this process.
It is disputed between the two whether significant parts of the Wirecard business existed, the so-called third-party business. Third-party partners processed credit card payments for Wirecard in Asia, for example. In order to financially secure these payments, trustees should keep money for Wirecard in accounts. During his interrogations, Bellenhaus testified that this business did not exist. He is now considered a key witness for the public prosecutor’s office. In contrast, Braun’s defense claims to have evidence of the existence of this business. A gang around the fugitive ex-CEO Jan Marsalek is said to have moved the money from this abroad via intricate company structures. Braun and Wirecard are therefore victims of this gang.
What are the prosecutors accusing the accused of?
The Munich I public prosecutor accuses the accused of incorrectly presenting Wirecard’s balance sheets since 2015, market manipulation, breach of trust and commercial gang fraud. The three are said to have presented Wirecard to the public as a “rapidly growing, extremely successful FinTech company” – among other things with the help of the business, which third-party partners such as Payeasy (Manila, Philippines) and Al Alam (Dubai, United Arab Emirates) for Wirecard handled in Asia.
In order to financially secure online card payments from third-party partners, 1.9 billion euros should ultimately be kept in Philippine escrow accounts. But: Because this business probably didn’t exist, these 1.9 billion euros never existed either. Insolvency administrator Michael Jaffé came to this conclusion in addition to the public prosecutor’s office.
Without taking into account the alleged sales and profits from third-party business, Wirecard would have ended up in the red. With the result that investors, banks and small investors would hardly have invested so much money in the payment service provider. The Wirecard bankruptcy destroyed assets worth more than 20 billion euros.
What role does the fugitive ex-CEO Marsalek play?
Jan Marsalek is considered the central figure in this scandal. The problem is: on the evening of June 19, 2020, he fled from a small airport near Vienna in the direction of Minsk. Local authorities now suspect him in Russia. There he is not tangible for them.
As a board member, Marsalek was responsible for third-party business. He was also responsible for the Asia region, where the suspected central criminal processes at Wirecard took place. As long as Marsalek does not appear again, it will probably be difficult to clarify crucial questions about this scandal.
What makes this process so special?
On the one hand, the height of the fall: For the first time, Braun, the former CEO of a DAX company that has slipped into bankruptcy, has to take a seat in the dock. Braun has been in the executive chair at Wirecard since 2002. He led the company into the DAX, the index of the 30 most valuable and largest companies in Germany, and that with just under 6,000 employees. For comparison: DAX members such as Volkswagen or Siemens had several hundred thousand employees at the time. If you consider that Wirecard was also thinking about taking over Deutsche Bank, then the drop becomes even clearer.
On the other hand, the court points out that the process is particularly time-consuming due to the sheer volume of papers that the parties involved have to work through. Almost 900 file folders have now been collected. The procedure is also complex due to the large number of scenes at home and abroad: Dubai, Manila, Singapore, Aschheim, the seat of the payment service provider, these are important locations for this scandal.
How long does the process take?
One thing is certain: 100 trial days are scheduled, initially until the end of next year. The schedule published by the Munich Higher Regional Court notes that organizational preparations for 2024 have already been made. It is still unclear when a decision will be made.
It is also clear that this process is about the criminal investigation and the responsibility of the three accused in the Wirecard scandal. Investigations against other suspects continue. The public prosecutor’s office is also investigating other facts, including allegations of money laundering. In this respect, this procedure will not yet put an end to the Wirecard matter. The question of possible compensation for investors and creditors is clarified in other proceedings.